Tesla Looks to Keep Up with High Demand from EV Buyers
It’s been a heady year for the EV industry. Spiking gas prices have pushed the demand for electric vehicles to unprecedented heights. In fact, demand is so high that manufacturers like Tesla are taking additional steps to keep up.
Reasons for High EV Demand
After the Russian invasion of Ukraine in February 2022, gas prices around the world soared. Before the war, Russian oil exports accounted for about 14% of the world’s total supply. With those supplies severely restricted due to sanctions and Russia throttling its exports, many countries, including the US, had to scramble to control rising oil prices.
With US gasoline prices topping $4/gallon in many areas, consumers began considering EVs as a way to avoid price volatility. Tesla, as the US’s premier EV manufacturer with a market share around 70%, got the bulk of the new business. Automotive revenues for Tesla in Q2 2022 were almost $15 billion, a quintupling from four years earlier, when revenues in Q2 2018 were just over $3 billion.
Another reason for increasing EV demand is growing policy support from the federal government. Congress’ 2021 infrastructure bill provides $5 billion to establish a national network of EV charging stations along interstate highways. In addition, the IRA (Inflation Reduction Act) of 2022 establishes a system of tax credits to make purchasing EVs more affordable for consumers.
In the future, these tax credits may help lower the cost of new Teslas, which are still on the expensive side. Prices start at $46,000, with the Model Y, the company’s most popular vehicle, starting at $66,000.
Tesla Expands Its Operations
To meet this demand, Tesla has just completed the expansion of its Shanghai manufacturing plant, which is projected to increase weekly production of Model 3s and Model Ys from 15,000 to 22,000. Tesla’s eventual goal is to produce one million vehicles per year at the plant.
This expansion of production capacity is already leading to decreased wait times for new customers. In China, wait time for the Model Y SUV has dropped from 4-8 weeks to 1-4 weeks. In the US, the logistics of shipping mean that new customers are still waiting about three months for their vehicles.
With rising demand and supportive policies, the EV market around the world is poised to skyrocket. Sunon is proud to be on the forefront of the EV revolution, with our cooling solutions used in EV battery packs and many other car components from HVAC systems to sunroofs.